FOREWORD. Spain. Services provided by member firms include:

Transcription

1 2015/16

2 FOREWORD A country's tax regime is always a key factor for any business considering moving into new markets. What is the corporate tax rate? Are there any incentives for overseas businesses? Are there double tax treaties in place? How will foreign source income be taxed? Since 1994, the PKF network of independent member firms, administered by PKF International Limited, has produced the PKF Worldwide Tax Guide (WWTG) to provide international businesses with the answers to these key tax questions. As you will appreciate, the production of the WWTG is a huge team effort and we would like to thank all tax experts within PKF member firms who gave up their time to contribute the vital information on their country's taxes that forms the heart of this publication. The PKF Worldwide Tax Guide 2015/16 (WWTG) is an annual publication that provides an overview of the taxation and business regulation regimes of the world's most significant trading countries. In compiling this publication, member firms of the PKF network have based their summaries on information current on 1 January 2015, while also noting imminent changes where necessary. On a country-by-country basis, each summary such as this one, addresses the major taxes applicable to business; how taxable income is determined; sundry other related taxation and business issues; and the country's personal tax regime. The final section of each country summary sets out the Double Tax Treaty and Non-Treaty rates of tax withholding relating to the payment of dividends, interest, royalties and other related payments. While the WWTG should not to be regarded as offering a complete explanation of the taxation issues in each country, we hope readers will use the publication as their first point of reference and then use the services of their local PKF member firm to provide specific information and advice. Services provided by member firms include: Assurance & Advisory; Financial Planning / Wealth Management; Corporate Finance; Management Consultancy; IT Consultancy; Insolvency - Corporate and Personal; Taxation; Forensic Accounting; and, Hotel Consultancy. In addition to the printed version of the WWTG, individual country taxation guides such as this are available in PDF format which can be downloaded from the PKF website at PKF Worldwide Tax Guide 2015/16 1

3 IMPORTANT DISCLAIMER This publication should not be regarded as offering a complete explanation of the taxation matters that are contained within this publication. This publication has been sold or distributed on the express terms and understanding that the publishers and the authors are not responsible for the results of any actions which are undertaken on the basis of the information which is contained within this publication, nor for any error in, or omission from, this publication. The publishers and the authors expressly disclaim all and any liability and responsibility to any person, entity or corporation who acts or fails to act as a consequence of any reliance upon the whole or any part of the contents of this publication. Accordingly no person, entity or corporation should act or rely upon any matter or information as contained or implied within this publication without first obtaining advice from an appropriately qualified professional person or firm of advisors, and ensuring that such advice specifically relates to their particular circumstances. PKF International is a family of legally independent member firms administered by PKF International Limited (PKFI). Neither PKFI nor the member firms of the network generally accept any responsibility or liability for the actions or inactions on the part of any individual member firm or firms. PKF INTERNATIONAL LIMITED JUNE 2015 PKF INTERNATIONAL LIMITED All RIGHTS RESERVED USE APPROVED WITH ATTRIBUTION PKF Worldwide Tax Guide 2015/16 2

4 STRUCTURE OF COUNTRY DESCRIPTIONS A. TAXES PAYABLE FEDERAL TAXES AND LEVIES COMPANY TAX CAPITAL GAINS PERSONAL INCOME TAX BRANCH PROFITS TAX VALUE ADDED TAX (VAT) FRINGE BENEFITS TAX (FBT) LOCAL TAXES OTHER TAXES B. DETERMINATION OF TAXABLE INCOME DEPRECIATION STOCK CAPITAL GAINS AND LOSSES DIVIDENDS INTEREST DEDUCTIONS LOSSES FOREIGN SOURCED INCOME INCENTIVES C. FOREIGN TAX RELIEF D. CORPORATE GROUPS E. RELATED PARTY TRANSACTIONS F. WITHHOLDING TAX G. EXCHANGE CONTROLS H. PERSONAL TAX I. TREATY AND NON-TREATY WITHHOLDING TAX RATES PKF Worldwide Tax Guide 2015/16 3

5 MEMBER FIRM For further advice or information please contact: City Name Contact information Barcelona Aischa Laarbi Madrid Santiago Gonzalez Barrau Malaga Ana Maria Lopez Narbona BASIC FACTS Full name: Kingdom of Spain Capital: Madrid Main languages: Spanish (Gastilian), Gatalan, Valencian, Gallego (Galician), Euskera (Basque) Population: million (2013 estimate) Major religion: Christianity Monetary unit: Euro (EUR) Internet domain:.es (.cat for Catalonia) Int. dialling code: +34 KEY TAX POINTS A Spanish resident company is liable to corporation tax on all sources of income and capital gains, wherever arising. A non-resident company is taxed on income and gains of a branch carrying on a trade in Spain. Foreign branch profits of a Spanish company are liable to Spanish tax. Capital gains are taxed as ordinary income. The transfer of real estate is generally subject to VAT at 21%. This is reduced to 10% for private residential property. If the transferor is not within the VAT system, transfer tax at 6% is applicable. Transfer tax is payable on the transfer of movable property, at a rate of 4% of the value. VAT is levied on the supply of taxable goods and services. The normal VAT rate is 21%. There is a reduced rate of 10% and a super-reduced rate of 4% on certain basic goods and services. A zero rate exists for exports and international services provided to non-eu countries. Dividends and interest are generally paid subject to a withholding tax of 19% at source (20% on 2015), although this is normally reduced or eliminated by a double tax treaty. Foreign taxes may be credited against Spanish corporation tax, whether or not a treaty exists with the foreign country. PKF Worldwide Tax Guide 2015/16 4

6 Spanish-resident individuals are liable for personal tax on their worldwide income; nonresidents are only liable on Spanish-sourced income. Resident individuals were subject to net wealth tax in respect of their worldwide assets. The different autonomous governments can establish different reductions. There is an inheritance tax charge on a recipient of property passing by gift or death. A. TAXES PAYABLE FEDERAL TAXES AND LEVIES COMPANY TAX Spanish resident companies are liable to corporation tax on all sources of income and capital gains, wherever arising. A company is treated as resident in Spain if it is incorporated in Spain, has its registered office in Spain or its effective management is in Spain. A non-resident company is taxed on income and gains of a branch carrying on a trade in Spain. Trading profits, other income and capital gains are liable to corporation tax at the rate of 25% (28% on 2015). Special tax rates are chargeable on portfolio investment funds (1%), on mutual insurance societies (25%), on co-operatives (except for capital gains) (20%), and on non-profit institutions (10%). For companies with an annual turnover in the previous year not exceeding EUR 10 million (small companies) the rate applicable during 2015 is 25% on the first EUR 300,000 of taxable income and 28% on profits in excess of that limit. For companies with an annual turnover in the previous year not exceeding EUR 5 million (micro companies) are allowed to apply the general rate (25%) from These micro companies, with fewer than 25 employees, need to maintain or create jobs. The Spanish tax year is the calendar year but companies can establish a different tax year. The main condition is that the tax year must not exceed 12 months. Corporation tax is due for payment 6 months and 25 days after the financial year end (on 25 July 2015, for example, for the year ended 31 December 2014). The tax return must be filed by the same date. There are two systems for advance payments: (1) Payments are calculated as 18% of the previous year's tax liability. The payments are due on 20 April, 20 October and 20 December. (2) Payments are based on the forecasted taxable income of the period as follows. General rate is 17% (20% on 2015). Three payments due on: 20 April: Taxable income of the period January-March less withholdings. PKF Worldwide Tax Guide 2015/16 5

7 20 October: Taxable income of the period January-September less withholdings and advance payment of 20 April. 20 December: Taxable income of the period January-November less withholdings and advance payment of 20 April and 20 October. The second system is mandatory for companies whose annual turnover is more than EUR 6,010,121. In this system and only during 2012, 2013, 2014 and 2015, the general rate is 20% for companies whose annual turnover is between EUR 0 and EUR 10,000,000, 21% for companies whose annual turnover is between EUR 10,000,001 and EUR 20,000,000, 24% for companies whose annual turnover is between EUR 20,000,001 and EUR 60,000,000 and 27% for those with turnover of more than EUR 60,000,000. CAPITAL GAINS Capital gains are taxed as ordinary income. Foreign-sourced capital gains are fully liable to Spanish corporate income tax with a credit for any foreign taxes payable, although such gains can be exempt under the terms of a double tax treaty. PERSONAL INCOME TAX The personal income tax rate for capital gains as a result of the sale of wealth goods is 19% (20% on 2015). Capital losses realised on the sale of goods may be offset against capital gains and saving incomes (with the limit of 10% on 2015, 15% on 2016 and 20% on 2017) or carried forward for four years to offset against capital gains realised in subsequent years. The losses not generated from the disposal of any wealth good may be set off against up to 25% of ordinary income and the remainder may be carried forward for up to four years to offset against future capital gains realised on the sale of assets. BRANCH PROFITS TAX Foreign branch profits of a Spanish company will be liable to Spanish tax. VALUE ADDED TAX (VAT) VAT is levied on the supply of taxable goods and services. The normal VAT rate is 21%. There is a reduced rate of 10% and a super-reduced rate of 4% on certain basic goods and services. A zero rate exists for exports and international services provided to non-eu countries. FRINGE BENEFITS TAX (FBT) There is no fringe benefits tax in Spain. LOCAL TAXES The main local taxes comprise: transfer tax, economic activity tax (trade licenses), property tax, tax on the increase of the value of urban land, tax on motor vehicles, tax on construction, planning permission and opening licenses for each business premises. PKF Worldwide Tax Guide 2015/16 6

8 OTHER TAXES The transfer of real estate is generally subject to VAT at 21%. This is reduced to 10% for private residential property and to 4% in the case of some housing. If the transferor is not within the VAT system, transfer tax at 6% is applicable. Transfer tax is also payable on the transfer of movable property. The rate is 4% of the value. The Spanish autonomous regions are allowed to modify the transfer tax rate and to fix their own rates (e.g. the tax rate for real estate properties is 10% in Catalonia and 6% in Madrid). B. DETERMINATION OF TAXABLE INCOME Trading profits are calculated for tax purposes in accordance with financial accounts but adjusted for the main items as follows. DEPRECIATION Depreciation can be deducted on a straight-line basis, reducing-balance basis (in the case of new tangible assets with a life of more than three years) or on an individual basis (if approved by the tax authorities). The Ministry of Finance issues guidelines on the maximum straight-line rates as follows: Asset Rate (%) Motor vehicles 16 Office equipment 10 Industrial buildings and hotels 3 Office and shop buildings 2 Air conditioning and central heating 12 Computer equipment 25 Software 33 Land cannot be depreciated. STOCK Stock and work in progress are valued at the lower of cost or market value. FIFO and average cost methods are acceptable. CAPITAL GAINS AND LOSSES As discussed above, capital gains and losses are included in the overall taxable profits of companies. DIVIDENDS Dividends paid are subject to a 19% (20% on 2015) withholding tax at source whether they are paid to residents. Dividends paid to EEC residents are subject to a 19% (20% on 2015). Dividends paid to PKF Worldwide Tax Guide 2015/16 7

9 non EEC residents are subject to a 24%. The withholding tax rate may be reduced under the relevant double tax treaties. Dividends received by certain companies (EU parent companies) are not subject to withholding tax at source if the holding is more than 5% and has been held for more than 12 months. Ally withholding tax suffered may be credited against the recipient company's corporate income tax liability. A Spanish company receiving a dividend from another Spanish company whose share participation is lower than 5% of the capital is subject to tax on 50% of the dividend. A Spanish portfolio investment company or a parent that has held more than 5% of the share capital is exempt from tax on dividends received from other Spanish companies. INTEREST DEDUCTIONS Interest is normally deductible on an accruals basis. Withholding tax of 19% (20% on 2015) is generally deductible from interest paid although this is normally reduced or eliminated by a double tax treaty. Since 2012 there are some limits to some financial expenses deduction. LOSSES From 1 January 2015 there is any time limit to carry forward the tax losses with future profits. The carry forward of losses is not normally restricted by a change in the ownership of a company's shares. In 2015 there are some restrictions on how losses can be utilised. Up to 50% of taxable profit may be off-set by companies with turnover between EUR 20,000,000 and EUR 60,000,000 and up to 25% of taxable profits may be off-set by companies with turnover of more than EUR 60,000,000. From 2016 all the companies will be allowed to off-set only the 70% positive tax basis with previous year s tax losses. FOREIGN SOURCED INCOME Under the International Fiscal Transparency regime, Spanish resident companies can be subject to tax on profits earned by certain non-eu resident subsidiaries in which they have more than a 50% interest. These rules apply to passive income earned by the subsidiary and taxed at a rate less than 75% than that which it would have been taxed if it had been earned by the Spanish resident company. INCENTIVES A credit against tax payable may be taken for 25% of research and development expenses. Where the expenses exceed the average amount incurred in the preceding two years, a credit equal to 42% is available on the amount exceeding the average amount. In addition there is a credit against tax payable of 12% of the cost of technological innovation of existing products. Industrial development banks and companies and venture capital companies and funds are subject to special tax regimes. PKF Worldwide Tax Guide 2015/16 8

10 C. FOREIGN TAX RELIEF Foreign taxes may be credited against Spanish Corporation Tax regardless of whether a tax treaty exists with the foreign country. There is no system of global foreign tax credited. Under certain circumstances, profits arising in permanent establishments of Spanish companies may be exempt from Spanish tax if they have suffered a similar tax overseas. Foreign tax credits are not available for the underlying taxes which the foreign company pays on the profits. D. CORPORATE GROUPS Permission may be obtained from the tax authorities to consolidate the results of a group of companies for corporate income tax purposes. The group must be headed by a Spanish resident company which directly or indirectly owns more than 75% of its subsidiaries. All subsidiaries must be Spanish resident companies. The result of consolidation is that all income, gains and losses of the group are brought together for tax purposes. E. RELATED PARTY TRANSACTIONS For tax purposes, transactions between related companies will be treated as if they had been made at arm's length prices. In certain cases (if certain thresholds are exceeded), the companies must disclose related parties transactions made during the year in the annual corporate tax form. F. WITHHOLDING TAX Withholding taxes paid to Spanish resident companies must generally be deducted from dividends and interest at 19% (20% on 2015) and from royalties at 24%. A 0% rate applies to royalties paid to associated EU resident companies. There are also withholding taxes payable on technical assistance fees and management fees payable to non-residents. All types of interest paid to EU resident companies (excluding Cyprus holding companies) are exempt. G. EXCHANGE CONTROLS In principle, all direct investments into Spain require previous verification by the Direccion General del Tesoro y Polftica Financiera (DGTPF). Outward direct investments also require approval by the DGTPF. H. PERSONAL TAX Individual residents are liable to Personal Income Tax (IRPF) in respect of their worldwide income. Non-residents are liable to IRPF only on their Spanish sourced income. PKF Worldwide Tax Guide 2015/16 9

11 An individual is deemed to be resident for tax purposes if: (i) He or she stays in Spain for more than 183 days in any calendar year; (ii) His or her centre of vital interests is in Spain; (iii) His or her spouse and minor dependent children qualify as residents of Spain. Fringe benefits in cash or kind constitute employment income. Ordinary gains and losses are treated as ordinary income. All businessmen and self-employed professionals are required to file quarterly returns and make advance payments by 20 April, 20 July and 20 October of the current year and 30 January of the next year on account of final income tax liability for the current year. All resident employees and self-employed individuals must register and pay monthly contributions to the Spanish social security system. The general rate of the employee's general social security contributions is 6.35% and the employer's contribution is 30.15%. The current tax rates for taxpayers are as follows: Tax Basis (EUR) 2015 Tax Rate 2016 Tax Rate Up to % 19% From up to % 24% From up to % 30% From up to % 37% From % 45% The current tax rates for savings incomes are as follows: Tax Basis (EUR) 2015 Tax Rate 2016 Tax Rate Up to % 19% From up to % 21% From % 23% Usually when earned income is less than EUR 22,000 the individual is not obliged to prepare a tax return. Resident individuals were subject to net wealth tax in respect of their worldwide assets. The different autonomous governments can establish different reductions (e.g. Madrid). Inheritance tax is also levied on the recipient of property passing by way of gift or death. The tax rate for inheritance can be chargeable in a progressive rate, from 0% to 34%from father to son, and increased rates in other cases. The rate is determined with reference to the total value of assets gifted to each beneficiary. PKF Worldwide Tax Guide 2015/16 10

12 I. TREATY AND NON-TREATY WITHHOLDING TAX RATES Dividends General Parent-Subsidiary % Minimum Share Rate Interest Fees Non treaty-countries 19%¹ 19%¹ 19%¹ Treaty countries: Albania 10 75/10 0/5 0/6 0 Algeria /5 7/14 Argentina /12 3/5/10/15 Armenia /10 Australia Austria Azerbaijan (USSR Treaty) Barbados Belarus (USSR Treaty) Belgium /10 5 Bolivia /15 15/0 Bosnia and Herzegovina /7 7 Brazil /10/15 10/12,5 Bulgaria Canada /10 Czech Republic /5 Chile /15 5/10 China Colombia /10 10 Costa Rica /5/10 10 Croatia Cuba /5 Denmark (Denounced 01/01/2009) East Timor (Treaty of Thailand) /15 5/8/15 Ecuador /10 5/10 Egypt /10 12 El Salvador /10 10 Estonia /10 5/10 PKF Worldwide Tax Guide 2015/16 11

13 Dividends General Parent-Subsidiary % Minimum Share Rate Interest Fees Finland /5 France /10 0/5 Georgia Germany Greece /8 6 Hong Kong /5 5 Hungary Iceland /5 5 India /15 10/20 Indonesia /10 10 Iran /7,5 5 Ireland /10 5/8/10 Israel /5/10 5/7 Italy /12 4/8 Jamaica /10 10 Japan Kazakhstan /10 10 Korea /8/10 10 Kuwait Kyrgyzstan (USSR Treaty) Latvia /10 5/10 Lithuania /10 5/10 Luxembourg /10 10 Macedonia /5 5 Malaysia /10 5/7 Malta Mexico /10/15 0/10 Moldova 10 25/50 5/0 0/5 8 Morocco /10 The Netherlands 15 25/50 5/ New Zealand /10 10 Norway PKF Worldwide Tax Guide 2015/16 12

14 Dividends General Parent-Subsidiary % Minimum Share Rate Interest Fees Pakistan 10 25/50 7,5/5 0/10 7,5 Panama 10 40/80 5/10 0/5 5 Philippines /10/15 10/15/20 Poland /10 Portugal Romania Russian Federation 5/10/ Former USSR Saudi Arabia /5 8 Serbia /10 5/10 Singapore /5 5 Slovak Republic /5 Slovenia /5 5 South Africa /5 5 Sweden Switzerland /0 Tajikistan (USSR Treaty) Thailand /10/15 5/8/15 Trinidad and Tobago 10 25/50 5/0 0/8 5 Tunisia /10 10 Turkey /15 10 United Arab Emirates 5/ United Kingdom United States (Signed on January 2013, not in force yet) Uruguay /5 5/10 Uzbekistan (USSR Treaty) Venezuela /4,95/10 5 Vietnam 15 25/50 7/ NOTES: 1. 19% (20% for 2015) for EEC countries and 24% for non EEC Countries. PKF Worldwide Tax Guide 2015/16 13

15 * Currently the Treaties between Spain and Oman, Nigeria, Namibia and Belarus are in the pipeline. * Spain is working with a view to publish new Treaties with India. * Treaties with United States of America and Uzbekistan have been signed but they are not applicable at this time. PKF Worldwide Tax Guide 2015/16 14

16